Deposit insurance and banking stability

Many countries provide extensive deposit insurance as a part of a safety net that promotes stability in the financial system. An unintended conequence of deposit insurance is that it reduces depositors’ incentives to supervise banks, leading to excessive risk-taking. The article discussed the rel...

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Autor principal: Cyrine Snen
Formato: article
Lenguaje:EN
Publicado: THOT Publishing House 2021
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Acceso en línea:https://doaj.org/article/765a1c275efc43b9b5a5c56042f69913
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Sumario:Many countries provide extensive deposit insurance as a part of a safety net that promotes stability in the financial system. An unintended conequence of deposit insurance is that it reduces depositors’ incentives to supervise banks, leading to excessive risk-taking. The article discussed the relationship between deposit insurance, bank risks and systemic vulnerabilities before and during the Great Financial Crisis